Assume the following holds at t=0: 1. The market expects the Dollar to nominally appreciate by 10% against the Euro over the next period 2. Australian expected inflation is 10% over the next period 3. European expected inflation is 5% over the next period 4. The real Dollar per Euro exchange rate is q = 1.1 What is the markets expectation of the real Dollar per Euro exchange rate at t=1?

Selected Answer:	C. Approximately 1.14
Answers:	A. The above information is not enough to calculate qe
	B. Approximately 1.045
	C. Approximately 1.14
	D. Approximately 0.935
	E. Approximately 1.265